We all have fixed monthly expenses. They’re the ones that are seemingly non-negotiable. The ones where there’s little or no wiggle room. Things like rent, car payments, utilities, cell phone plans, and student loan repayments. Whereas we can always cut our expenses in any given month by eating out less, shopping less, or just generally having less fun, those fixed expenses have to be paid in full every month. Or do they?
There are a few ways you can cut fixed expenses. It takes a little time (which is often our most precious resource) but can be well worth it in the long run. If overhauling your finances is part of your plan for 2020, this is as good a place to start as anywhere.
Take a look at your cell phone plan
This seems like a fixed expense, but there are actually a few ways you could lower your monthly cell phone bill. You may be able to switch to a cheaper plan, or claim a discount (maybe one you didn’t qualify for when you first signed up). Discounts are often available for students, government employees, veterans, and employees of certain companies. Look at your protection plan too. You may be paying for an extended warranty, insurance, or tech support you don’t really need. And if you’re due for an upgrade? Think long and hard. Do you really need it? Having the very latest cell phone is an option, not a necessity. And you’ll save a lot by keeping your current model.
Find out if you can switch providers for your utilities
Depending on where you live, there may be an alternative provider for some or all of your utilities, at a cheaper price. The Annual Baseline Assessment of Choice in Canada and the United States found that a significant number of residential customers could save money by switching utilities companies. A switch can also come with other advantages, such as prepaid or fixed price contracts, rebate card programs, and renewable energy options. It’s definitely worth taking the time to find out what your options are.
Can you bundle any services?
While you’re researching utilities options, find out if any available providers (including your current one) can bundle services to help you save money. It’s often cheaper to bundle your cable and internet, for example. Depending on your carrier, this could save you hundreds of dollars a year. You may also find that energy providers will bundle electricity with things like energy management devices and apps.
See if you can lower your car payment
Refinancing your auto loan might let you take advantage of interest rates that are lower than when you took it out. You’re particularly likely to get a lower interest rate if your credit score has improved since your original loan was agreed. If you’ve taken on huge lease payments on an expensive car, you may want to rethink that. You could consider trying to find someone to take over your contract, on a site like Leasetrader. And then start again with a more affordable vehicle and payment plan.
Re-negotiate student loan payments
Yes, it’s possible to lower your monthly payment on your student loans. One way, if you’re eligible, is through an income-driven repayment plan. There are a few different types, and they are potentially available to anyone who’s currently making repayments on a federal direct loan. The criteria for each plan is different. Debt.org has some great information on income-driven repayment plans.
Reduce your mortgage
If you’re renting, that’s a true fixed expense. The only way to cut your monthly expenses here is to move into cheaper accommodation. If you’re paying a mortgage, however, you may be able to reduce your monthly payments without moving house. Re-financing a mortgage can result in lower monthly expenses, although it can also mean you’ll pay a higher overall figure by the time your mortgage is cleared. Occasionally, you can cut monthly payments by switching to a better deal with a lower interest rate, and still not pay more overall. Again, this is more likely if your credit score has improved significantly. Seek professional advice on this one, because there are a lot of pros and cons to consider.
Even if you can do just one or two of the above, you’ll be looking at lower monthly expenses, and this will add up over time. Sometimes ‘fixed’ expenses aren’t as fixed as we think they are.